A review of past and existing GoO systems - … · A review of past and existing GoO systems ... K. Veum (ECN) M ... green hydrogen technology developers and automobile manufacturers

A review of past and existing GoO systems

Grant agreement no.: 633107

Deliverable No. 3.1

“Review of past and existing GoO systems”

Status:

Final

Dissemination level:

“PU - Public”

Last update:

October 31, 2015

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Authors:

K. Veum (ECN)

M. Londo (ECN)

J.C. Jansen (ECN)

Date: 31 October 2015

The sole responsibility for the content of this report lies with the authors. It does not

necessarily reflect the opinion of the European Communities. The European Commission

is not responsible for any use that may be made of the information contained therein.

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Table of Contents

Executive Summary .................................................................................................................... 5

1 Introduction ................................................................................................................. 7

1.1 Certification of green hydrogen: the CertifHy project ................................................ 7

1.2 Guarantees of origin: context and history ................................................................... 8

1.3 Objective and structure of this report ....................................................................... 10

2 Renewable electricity GoO systems .......................................................................... 11

2.1 Introduction: Purpose and legal basis ....................................................................... 11

2.2 Key actors and their roles .......................................................................................... 13

2.3 Key design features of a GoO scheme for RES-E ....................................................... 13

2.4 Key issues and lessons learned .................................................................................. 17

3 Other GoO systems .................................................................................................... 21

3.1 Renewable heat GoO systems for renewable heating (and cooling) ........................ 21

3.1.1 Introduction ....................................................................................................... 21

3.1.2 Key design features ............................................................................................ 21

3.1.3 Key actors and their roles .................................................................................. 22

3.1.4 Key issues and lessons learned .......................................................................... 22

3.2 Renewable methane certification systems ............................................................... 23

3.2.1 History ................................................................................................................ 23

3.2.2 Actors ................................................................................................................. 23

3.2.3 Current purposes and definition ........................................................................ 24

3.2.4 Key issues and lessons learned .......................................................................... 24

3.3 Renewable transport fuel certification...................................................................... 26

3.3.1 Context and objectives ...................................................................................... 26

3.3.2 Other features .................................................................................................... 26

3.3.3 Issues and lessons learned ................................................................................. 27

4 Conclusions: Implications for a (green) hydrogen certificate system ....................... 28

4.1 Key lessons learnt and recommendations for an optimal scheme ........................... 28

4.2 Key issues of existing schemes relevant to hydrogen ............................................... 29

4.3 Initial thoughts on a development pathway for a hydrogen GoO scheme ............... 30

References ............................................................................................................................... 31

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Annex I: Directive 2001/77/EC on the concept of Guarantee of Origin .................................. 33

Annex II: Factsheets of various GoO systems for renewable natural gas ............................... 36

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Executive Summary

The CertifHy project develops a roadmap for the implementation of an EU-wide framework for Guarantees of Origin for green hydrogen (Green H2 GoO), supported by the Fuel Cells and Hydrogen Joint Undertaking (FCH JU) and affiliated partners from industry players in the hydrogen and associated sectors.

This CertifHy report reviews existing platforms for GoOs, in order to yield lessons learned that should be heeded in designing a successful GoO system to facilitate a future green hydrogen market in the EU. It reviews initiatives within the EU to certify the origin of electricity, renewable methane, and biofuels. Focal issues include:

the process organisation including the roles defined for distinct stakeholders,

the premium value the system creates for the users of GoOs and the extent to which the

system concerned provides an EU-wide platform for exchange of GoOs.

Conclusions are structured along three axis: recommendations for an optimal green hydrogen GoO scheme; key remaining issues from experiences with other schemes; and some initial considerations for a development pathway for the green hydrogen scheme.

Key findings that provide a general basis for designing a Green H2 GoO scheme are:

Most importantly, there is an overall functional set-up of GoO systems for various

energy carriers. This basic structure can be duplicated for a green hydrogen GoO system.

Any claims made by market parties in commercial messages will have to be proven by

cancellation of the required GoOs.

For detailing the system, the Rules and Principles for a European Energy Certificate

Systems (EECS), provided by the Association of Issuing Bodies (AIB) are the best basis to

start with. While they have not been fully implemented in all Member States, it would

be beneficial for a GoO scheme for hydrogen to use these principles from the start.

A key element of the GoO system should be the separation between information about

the origin of the product, and the part that specifies whether the product meets certain

qualifications, such as the CertifHy definition of green hydrogen. The information part is

factual, while the qualifications part may change with developments in policy over time.

In order to contribute to a well-functioning internal market and prevent any barriers to

international trade, national registries should preferably use identical data structures or

an EU-wide Green H2 GoO scheme should be developed from the outset.

The Green H2 GoO scheme should cover all possible production routes for green

hydrogen, including import and export within the EU and with third countries. It should

also be open to all applications using hydrogen.

The main function of the Green H2 GoO system should be consumer disclosure.

However, it could indirectly also serve other purposes, such as policy compliance, and

the scheme should anticipate this.

With potential changes in the external environment of the GoO scheme and its use, a

transparent and regular review and update of the system is also important.

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At several points, the review has revealed issues that have not (yet) been solved in the

currently existing GoO systems, or that are treated differently among them.

The issue of additionality, i.e. whether the purchase of a GoO leads to an increase in

renewable energy production capacity in comparison to the situation without such

purchase. Better transparency on whether or not additionality is achieved, would be

beneficial from the perspective of consumers.

The issue of the residual mix: although residual mix calculations as such do not need

to be complex, trade, import/export and conversion between energy carriers

complicates their calculation and increases the risk of double counting. This risk can

be overcome by proper bookkeeping. In the long term, full coverage of all energy

sources by the GoO systems would eliminate the residual mix issue.

Another point of attention is the conversion of one energy carrier into another (e.g.

from renewable electricity into renewable hydrogen). In principle, proper book-

keeping is sufficient to make sure such conversion is correctly taken care of; earlier

experiences show, however, that careful design of procedures is essential.

Losses are not taken into account in current GoO schemes, such as the GoO for

renewable electricity. However, there may be issues of energy losses that need to be

taken into account when dealing with energy transformations of (green) hydrogen.

To what extent should production of installations that use both renewable and non-

renewable energy be eligible for a renewable or green certificate? And what if the

overall CO2 intensity of such installations is relatively high? Examples of this are

biomass co-firing in coal-based power plants, and electrolysis hydrogen production

systems that partly use renewable and partly non-renewable power. This point

requires attention in the definition of green hydrogen. In support, a GoO system

could provide information not only about the directly related GHG emissions, but

also on the GHG emissions of the production system as a whole.

In general, the fact that the renewable attribute of an energy carrier is separated

from its physical trade makes a GoO inherently less ‘fool-proof’. Existing GoO

systems still encounter challenges with this type of ‘virtual trade in renewable

attributes’, e.g. in terms of general consumer confidence. In the design of any GoO

system, there needs to be alertness on this point.

The lessons learnt and issues identified already set the scene for a development pathway for

green hydrogen GoOs, which contains a strategic dilemma. On the one hand, a scheme

should be as elaborate as possible from the early beginning, and cover the entire EU from

the start. On the other hand, the review also shows significant differences between Member

States in how they deal with some elements of their existing GoOs. It may thus be difficult

to find EU-wide initial consensus. In a development pathway for a hydrogen GoO, it is

probably most effective to start with a system that covers the elements on which the

current review shows consistency between Member States. For its further development,

the GoO characteristics on which national positions differ should be further elaborated and

discussed, in order to reach a workable compromise.

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1 Introduction

1.1 Certification of green hydrogen: the CertifHy project

The CertifHy Project Consortium aims to develop a roadmap for the implementation of an EU-wide framework for guarantees of origin (GoO) for green hydrogen1. The CertifHy project has been structured in the following Work Packages:

1. Generic market outlook for green hydrogen 2. Definition of “Green Hydrogen” 3. Review of existing platforms for GoO 4. Definition of a new framework of guarantees of origin for "green" hydrogen 5. Roadmap for the implementation of an EU-wide GoO scheme for green hydrogen

This deliverable is the result of the first task in Work Package 3: the review of existing platforms for GoO. The main objective of this Work Package is to yield lessons learned that should be heeded in designing a successful GoO system to facilitate a future green hydrogen market in the EU. A review of past and existing initiatives to set up GoO systems is made, including their purposes, the stakeholders involved and their respective roles as well as the uses of the GoOs and functioning of the GoO system concerned. The review encompasses on-going and failed initiatives within the EU to certify the origin of electricity (from renewables-based or high-efficiency CHP generation installations), green gas, and biofuels and, to the extent applicable, green materials, notably for disclosure purposes. Task 3.1, of which this report is the result, will be followed by: Task 2 Interaction between existing certification schemes and the envisaged hydrogen

GoO system Task 3 Stakeholder interviews to identify what the specific challenges are with regard to

certifying green hydrogen and how these can be addressed, building on the experiences gained from certification schemes in other markets.

Task 4 Consolidation of WP3 results into a final WP3 report that will incorporate the results and recommendations obtained from the stakeholder interviews.

1 The project coordinated by Hinicio, brings along the Energy Research Centre of the Netherlands (ECN), Ludwig–Bölkow-

Systemtechnik (LBST) and TÜV SÜD, supported by a wide range of key European industry leaders (gas companies, energy utilities, green hydrogen technology developers and automobile manufacturers as well as leading industry associations).

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1.2 Guarantees of origin: context and history

Energy carriers such as electricity and gas are commodities that depend on extensive infrastructure in order to be transported and traded. This creates potential difficulties in setting up dedicated infrastructures for separately trading energy carriers that have specific characteristics (renewable or other sustainability criteria). As a solution, Guarantees of Origin systems have been set up, which allow for trade in the specific characteristics of the energy carrier, separated from the physical flow of the energy carrier itself, which is then traded through the conventional infrastructure.

The general set-up of GoO systems is illustrated in Figure 1. Key elements are:

An accredited issuing body issues GoOs to producers of the energy carrier, and keeps track of them in a registry;

When an end consumer claims he has consumed energy with the certified characteristics, he should own a corresponding GoO, which is then cancelled;

Trade of the GoO is administrated and tracked in the registry until the GoO is cancelled.

Figure 1: Schematic view of a GoO system, in this case for green electricity (Grexel 2014). This figure is equally applicable for a GoO scheme, and Certificate Markets and Certificate Registry could also be read as GoO Markets and GoO Registry.

The concept of guarantees of origin was introduced in Directive 2001/77/CE, the first directive on renewable electricity. This directive introduced GoOs as proof of origin for renewable energy, thereby facilitating trade in renewable energy and increasing transparency for the consumer’s choice between renewable and non-renewable energy.

Later, GoOs were also introduced for electricity from CHPs (in the corresponding European CHP directive), and today, GoO systems also exist for renewable heating and cooling, methane from renewable sources, and biofuels. Further details are presented in Chapter 2 and 3. GoOs are one of several tracking systems that have been developed over the past years. Box 1 provides a brief description of the distinction between GoOs and other tracking schemes, such as renewable energy certificates and labelling schemes.

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Box 1: Understanding different tracking systems

In addition to the Guarantees of Origin system, there are a number of other tracking

instruments for the same or similar purposes, such as renewable energy certificates and

energy labels.

Renewable energy certificate (RECS): This is a more generic term for all tradable

certificates for renewable energy. RECS international, a non-profit-making European

association of market players trading in renewable energy certificate, distinguishes

systems for the voluntary market and for the target compliance market. In the voluntary

market, GoOs and RECS certificates principally fulfil the same function. Where they

differ, however, is that a GoO is required under EU Directives which are obligatory in all

Member States of the European Union (for more details see section 2.1). RECS

certificates are issued as a voluntary initiative by energy companies. RECS in target

compliance markets are the tradable certificates in e.g. national quota obligation

systems, such as the UK Renewable Obligation Certificates or ROCs, the Elcert in Sweden

and the Certificati Verdi in Italy.

Labelling systems: GoOs should not be confused with green electricity labels. Both

provide consumers with more information about their energy (transparency). However,

labelling systems often go further by requiring, for example, additionality. Whilst

labelling schemes, such as OK-Power (DE) and Naturemade (CH) are private initiatives,

GoOs arise from European regulations. Green electricity quality labels, such as the

Eugene Green Energy Standard or EKOenergy labelling scheme, are issued to products

that meet certain criteria (sometimes subjective) set by a so-called Labelling Body. Such

criteria may show a preference for certain renewable energy sources and exclude other

sources. Quality label information is different from the ‘disclosure’ regulation, which

requires an objective display of information regarding the electricity provided without

attaching any value judgement to the disclosed information (Burger et al. 2004).

Table 1: Most relevant types of electricity tracking systems in Europe. (Source: Timpe and Sprongl 2009).

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1.3 Objective and structure of this report

This report seeks to derive lessons relevant for a green hydrogen GoO system that can be

learned from experience gained with guarantees of origin of other energy carriers. The

emphasis is on GoO systems of renewable electricity (RES-E GoO), in section 2. Furthermore,

systems for guarantees of origin and certificate systems for renewable heating and cooling,

green gas and biofuels are discussed in section 3. Finally, our key conclusions are

summarised in section 4.

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2 Renewable electricity GoO systems

2.1 Introduction: Purpose and legal basis

Purpose

The purpose of an electricity guarantee of origin (GoO) system is to provide a proof of the

renewable origin of electricity (RES-E). A prime driver for the establishment of a RES-E GoO

system has been a market for ‘green power’, where consumers can buy electricity

generated from renewable energy sources and pay a premium for this (Grexel 2014). A GoO

scheme facilitates electricity disclosure and enables consumers to make informed choices

about the electricity they buy based not only on price but also, for example, on the type of

generation and related environmental effects (Boardman et al. 2003). In addition to serving

the disclosure purpose, a GoO scheme can also serve the purpose of supporting the

management of a support mechanism (as is the case, for example, in the Dutch SDE+

scheme). Use of GoOs for national target accounting purposes has also been discussed in

the literature (Timpe and Sprongl 2009), however, this latter purpose is not allowed by the

RES Directive, as will be described in more detail below. The different interpretation of the

purpose of the GoO also proved to be one of the major obstacles towards their

transferability across borders.

Legal basis

The GoO as defined by the EU directives is the only tracking system with a clear legal basis

at EU level. The GoO concept was first introduced in the Directive on the promotion of

renewable electricity from renewable energy resources2 (hereafter referred to as “2001

RES-E Directive”). The provisions concerning the GoO scheme have been updated in the

Directive on the promotion of renewable energy sources3 (hereafter referred to as “2009

RES Directive”).

The 2001 RES-E Directive pointed out that the GoO had to be distinguished from tradable

green certificates, i.e. it indicated that it was the prerogative of a Member State to decide as

to whether or not a GoO implied a right to benefit from the pertinent national support

scheme. It stipulated that a guarantee of origin shall:

2 Directive 2001/77/EC of the European Parliament and of the Council on the promotion of electricity produced from

renewable energy sources in the internal electricity market, OJ L 283, 27.10.2001, pp. 33-40. 3 Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of

energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (Text with EEA relevance), OJ L 140, 5.6.2009, p. 16–62

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specify the energy source from which the electricity was produced, specifying the dates and places of production, and in the case of hydroelectric installations, indicate the capacity;

serve to enable producers of electricity from renewable energy sources to demonstrate that the electricity they sell is produced from renewable energy sources within the meaning of this Directive.

The 2009 RES Directive provides further clarity on the purpose and functionality of the GoO.

It does so by defining the GoO instrument in more detail and more consistently (Timpe and

Sprongl 2009). With the 2009 RES Directive, it was made clearer that the sole purpose of the

GoO system is electricity disclosure. Furthermore, it requires one electronic registry for the

issuance, transference and cancellation of GoOs to be operated by a single competent body

per geographical region. The 2009 RES Directive limits the use of the GoO for target

counting to statistical accounting between governments. Furthermore, the directive

requires that that the GoO system must be “accurate, reliable and fraud-resistant, and that

Member States shall accept GoO from other Member States for disclosure purpose”.

In addition to the EU directives covering GoOs for renewable energy, the Internal Electricity

Market (IEM) Directives4 require Member States to introduce "electricity source disclosure"

schemes for all electricity sold to final consumers. The IEM Directives do not require a

specific GoO, but instead that certain information concerning the electricity generation is

provided to final consumers as a part of their electricity bill. This information includes the

contribution of each energy source to the overall fuel mix of the supplier, and inform on the

environmental impacts (such as CO2 emissions and radioactive waste related to the power

generation).

The disclosure requirement was implemented for the first time by the Directive 2003/54/EC

on the functioning of the internal electricity market (hereafter referred to as the “2003 IEM

Directive”). The regulation on electricity disclosure has later been revised in the Energy

Market Directive 2009/72/EC (hereafter referred to as the “2009 EM Directive”), which had

to be implemented by EU Member States by March 2011 (Timpe and Sprongl, 2012). Whilst

the 2009 RES Directive refers to the purpose of disclosure, the 2009 EM Directive does not

refer to GoO.

EU legislation also provides for GoO for electricity generated from high-efficient

cogeneration of heat and power. The respective regulations on high-efficient cogeneration

of heat and power are now included in the Energy Efficiency Directive 2012/27/EC.

4 Directive 2009/72/EC of the European Parliament and of the Council (and its predecessors Directives 1996/92/EC and

2003/54/EC).

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2.2 Key actors and their roles

The key actors are a function of the purpose(s) of RES-E GoOs and the institutional

embedding of RES-E GoO tracking systems, as envisaged in relevant EU legislation and its

transposition into national legislation of the Member States. In principle, the following

actors play an important role:

The national regulatory agency (or designated competent body) that is responsible

for the regulatory framework, and which has to oversee the operator of the national

tracking system and the functioning of the national RES-E GoO market.

The operator of the national RES-E GoO tracking system (operators of national/sub-

national tracking systems), often referred to as the registrar and issuing body.

The Association of Issuing Bodies, representing the operators of national GoO

systems, including notably RES-E GoO systems.

Relevant EU-level trade associations, i.e. RECS and EFET.

Relevant bodies of the European Commission overseeing proper implementation of

EU legislation regarding RES-E GoOs by the Member States: the DGs for energy

(ENER), competition (COMP) and health and consumers (SANCO).

Generators of renewable electricity, requesting issuance of GoOs.

Electricity infrastructure operators: the national distribution system operator (DSOs)

and transport system operators (TSOs), measuring RES-E generated per reporting

period (e.g. day, month).

Certification and auditing companies of RES-E installations and, when applicable, bio-

degradable fractions.

Electricity suppliers offering eco power tariffs or green deliveries by using GoOs.

Business actors using GoOs for cancellation as proof of green environmental impact

claims in annual CSR (corporate social responsibility) reports and commercial

communications, advertisements, etc. and their representative bodies.

Other final electricity customers, notably households, buying specialty (“green”)

electricity products and their representative bodies, such as BEUC and national

consumer associations.

2.3 Key design features of a GoO scheme for RES-E

As mentioned above, the 2009 RES Directive sets the requirements for implementation of

the GoO as a tracking and disclosure tool for RES-E in Member States. Whilst Annex I in this

report provides a full overview of the detailed requirements, this sub-chapter highlights key

design features of the GoO.

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The Functioning: Cradle-to-grave

The set-up of a RES-E GoO scheme follows the general structure as explained in section 1.2

and Figure 1. The 2009 RES Directive requires a GoO to be issued by a national competent

body at the request of a producer, thus, on a voluntary basis for the producer. A standard

size is defined: 1 GoO per MWh. The GoO has a validity of maximum 1 year, must be

registered electronically, and cancelled upon use. The Directive does not provide any

clarification on what is actually meant by ‘use’. It can, however, be understood, in the

context of the Directive, that a GoO must be cancelled by suppliers for each MWh of RES-E

supplied by them, in conformity with the “green power” product they sell to final

consumers. Following the 2001 RES-E Directive and the subsequent 2009 RES Directive,

most Member States have established national GoO schemes, with relevant national

legislation and regulations covering roles and responsibilities (e.g. competent issuing body),

procedures and rules for accreditation of eligible power generation plants, rules for the

issuance and cancellation of GoOs, etc., and in some countries also rules for the transfer of

GoOs.

Information included in the GoO

In accordance with the 2009 RES Directive, a RES-E GoO shall specify at least:

the energy source from which the energy was produced and the start and the end

dates of production;

whether it relates to electricity, or to heating or cooling;

the identity, location, type and capacity of the installation where the energy was

produced;

whether and to what extent the installation has benefited from investment support,

whether and to what extent the unit of energy has benefited in any other way from

a national support scheme, and the type of support scheme;

the date on which the installation became operational; and

the date and country of issue and a unique identification number.

Ensuring reliability, accuracy and fraud-resistance

Reliability, accuracy and fraud-resistance are crucial for market confidence. If these criteria

are not ensured, market parties will have little or no confidence in the actual instrument

and the instrument will not be able to serve its purpose. For example, from the perspective

of the RES Directive, reliability relates to the question: How to ensure that the information

about the source of the electricity supplied can be trusted by the electricity customer?

There are a few EU legislative requirements pertaining to the GoO aimed at addressing the

reliability, accuracy and fraud-resistance issues. These include, among others:

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Only one GoO is to be issued for a MWh of renewable electricity generation.

All GoOs are to be registered electronically, and issued by a designated competent

body, whereby the designated bodies do not have overlapping geographical

responsibilities, and be independent of production, trade and supply activities.

Validity period of maximum 1 year, and GoO shall be cancelled once it is used.

Guarantees of Origin and renewable electricity support schemes

While GoOs have the main objective of stimulating renewable electricity development

through consumer disclosure, all EU Member States also have renewable energy targets and

governmental support schemes for renewables. One of the RE-DISS II5 project good practice

recommendations (RE-DISS II 2015a) is to use GoOs only as a tool for disclosure, and not as

an instrument for target disclosure or as a support instrument.

In practice, Member States have different approaches towards the co-existence of GoOs and

national support schemes (RE-DISS II 2015b).

In countries with a quota obligation as the key policy instrument, such as the UK,

Sweden, Italy, Poland and Belgium, each unit of renewable electricity produced is

eligible for a tradeable certificate in the context of that obligation (e.g. ROCs in the

UK, Elcerts in Sweden) and for a separate GoO for consumer disclosure. These two

types of certificates are usually traded and administered separately.

In most countries with a feed-in payment scheme, GoOs are banned or discouraged

for supported production. In Germany, GoOs cannot be issued for production under

the feed-in tariff scheme, the well-known Energie Einspeisegesetz (EEG). In France,

revenues earned by a producer through the sale of a GoO from feed-in-supported

electricity need to be paid back to the government. And in Spain, selling a GoO

obliges the producer to invest part of the revenues in environmental actions, and

pay back the governmental support they received for the energy to which the GoO

relates. The Netherlands and Austria have less discouraging rules on GoOs in their

feed-in support schemes. In the Netherlands, a producer of renewable electricity

can receive both feed-in support and a renewable GoO. In Austria, GoOs of

supported production can be used for domestic disclosure but are not allowed to be

traded internationally.

The difference in GoO treatment between quota and feed-in payment systems follows a

certain logic. In quota systems, the additional costs of renewable electricity that producers

face are usually transferred to the end consumers. If specific consumer groups are willing to

pay for 100% renewable consumption, a producer can reduce the cost transfer to his

consumers by selling a GoO. In feed-in payment systems, related costs are generally brought

5: The RE-DISS projects (I and II) aim at improving the reliability and accuracy of the information given to consumers of

electricity in Europe, with a focus on GoOs. Details see www.reliable-disclosure.org.

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up by either the government (via taxes) or transferred to end consumers via an additional

tariff on their energy bill. It seems defendable that the tax or tariff payer should benefit

from the GoO as well, e.g. by having a corresponding renewable share in their standard

electricity consumption (Germany) or by a transfer of GoO sales benefits back to the

government (France).

Cross-border trade arrangements

Whilst the 2009 RES Directive requires individual Member States to recognise GoOs from

other Member States, there are no legal requirements covering the transfer and trade of

GoO between countries. The details on how such recognition could take place, and which

reasons might justify a refusal to recognise a given GoO, are not clearly defined in the 2009

RES Directive, and therefore both national competent bodies as well as market participants

are currently in an unclear situation on how to handle this (RE-DISS, 2015). Although trade

in GoOs actually takes place, it is assumed by most experts that a lack of clarity of these and

other important issues play a role in hampering cross-border trade.

Following the 2001 RES-E Directive and the subsequent 2009 RES Directive, most countries

implemented GoO schemes as national systems which were not well designed for cross-

border transfers (Timpe and Sprongl, 2009). To facilitate cross border transfers, the

European Energy Certificate System (EECS) was established in 2007 by the Association of

Issuing Bodies (AIB). The EECS supports the issuing, transfer and cancellation of various

types of GoOs, including RES-E GoOs, and has an established electronic hub which facilitates

cross-border transfers of GoOs. The EECS provides for an EU-wide standard encompassing

GoOs for RES-E as well as GoOs for high efficiency CHP, RECS certificates (see Box 1) and

other generic disclosure certificates. Today, many countries make use of this hub for

international trade in GoOs. The 2009 RES Directive does not require Member States to

accept the EECS system. However, many countries are operating their national GoO

schemes and the EECS scheme in parallel.

GoO impacts on the environmental profile of other electricity consumed: the residual mix

Electricity consumption for which a renewable electricity GoO is cancelled can be claimed as

being renewable. As a consequence, a consumer who uses grid electricity without the

cancellation of a GO certificate is consuming electricity with the environmental

characteristics of the residual mix. The residual mix has the environmental profile of the

power production that is not allocated to a specific individual or end-consumer. Practically,

this means that the environmental profile of the residual mix needs to be corrected when a

GoO is cancelled from the national registry, either because of domestic final use, conversion

into another energy carrier, or export of the GoO. The national GoO issuing body or a

delegate is the logical party to annually calculate the national residual mix, but this is not

done in all GoO systems (see below).

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Additional features/issues:

A few countries already allow for the issuance of GoOs for all types of electricity generation

(nuclear, coal, etc.). Studies, such as RE-DISS6, are addressing possible extensions, such as

fair-trade, CO2 statistics, and additionality7. Particularly the aspect of additionality is not

easy to cover as it introduces an extra level of complexity (RE-DISS II, 2014).

There is little information in the public domain on the cost of tracking schemes, including

the GoO. The E-Track study stipulates a wide cost range for tracking systems, with the

highest cost estimate reaching 0,2% of the wholesale price of baseload electricity (Ritter et

al. 2007).

The study stipulates, furthermore, that a key driver for the large differences in costs is the

requirements resulting from more policy integration (Ritter et al. 2007). An example of

policy integration is when GoOs are used to support scheme payments, as is the case in the

Netherlands. However, the size of the market segment for the GoO is also a cost driver for a

tracking scheme. The larger the market for GoOs, or similar tracking schemes, the more the

unit costs will decrease, since the total costs can be distributed among more participating

market parties. Thus, the Dutch GoO is relatively cheap in ‘per MWh’ terms as the total

system costs are spread over a large market segment.

Costs of a tracking scheme typically include development and operational costs.

Development costs include the development of a registry, including system specifications,

software development, development of the interface to a hub, and testing. Operational

costs are mainly dependent on how the procedures are set up and on how the system is

used. Operational costs would typically include costs related to issuing (such as plant certify-

cation and auditing, collection and verification of data concerning plants and production of

electricity at the plants). Costs can be reduced if there are already procedures (for auditing,

data acquisition, etc.) in place that can be used directly for tracking (Ritter et al. 2007).

2.4 Key issues and lessons learned

Table 2 below summarises key (non-exhaustive) issues and concerns pertaining to the

specific EU legislative requirements and to the design of the GoO schemes. Most of these

issues and concerns have been raised by stakeholders and presented through various

projects, such as E-TRACK and RE-DISS. The table also presents proposed solutions. Table 3

below summarises additional issues and concerns which largely relate to lack of EU

legislation covering renewable energy, the internal electricity market, and high efficiency

cogeneration and energy efficiency.

6 http://www.reliable-disclosure.org/

7 Additionality usually refers to an additional environmental effect over and above the status quo or business-as-usual

development, which is related to the consumption of a green electricity product. (Seebach, 2014).

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Table 2: Issues and concerns specifically on the design of GoO relating to the requirements and implementation of the EU RES Directives, or lack thereof. Sources: AIB (2015), RE-DISS II (2015a, 2015b), Raimundo (2015), RE-DISS (2012), Timpe and Sprongl (2009).

Issues and concerns Possible solutions considered Trading of GoOs proceeds bilaterally, thus leading to cumbersome price discovery and (unwanted) market segmentation, e.g. based on source (e.g. biomass versus solar) and location (Dutch versus Norwegian hydropower).

Central trading platforms have been developed to overcome this. This can improve price discovery possibilities. Yet, market actors may feel a commercial need to introduce distinctive green electricity products into the market. Hence, complete transparency would seem elusive. For new markets, such as Green Hydrogen, a solution might be to have a unified GoO system from the very beginning. Then, this GoO system has a good chance of becoming the main commodity.

The credibility, i.e. reliability, accuracy and fraud-resistance, of the GoO has been questioned

For ensuring consumer empowerment and reliability from the consumer’s perspective, including the mitigation of double counting problems, an integrated approach is required. This would imply that for proving a defined profile of the energy carrier at stake, e.g. the renewable or the low-carbon origin, only GoOs are allowed to be used for whatever commercial purpose. Then it is ensured that consumers can influence the supply profile of the energy carrier concerned. Concerning cross-border exchange, countries should set up clear criteria for the recognition of imported GoOs.

2009 RES Directive defines a GoO’s validity of 12 months after production of the generation, but does not regulate whether GoOs that represent generation attributes of one year should be eligible for ‘electricity disclosure’ use in another year.

Art. 3(9)a) of the 2009 EM Directive mandates disclosure of the supplier’s fuel mix in the preceding year. It does not mandate use of GoOs for the RES part of this mix, but allows for it. It would improve transparency of the consumer’s choice to mandate ex ante disclosure of the fuel mix for the current accounting year with mandatory use of GoOs.

Current information on GoOs is not sufficient to accommodate for consumer carbon footprint calculations. Some companies currently use reference values for the associated fuel for this purpose, but this ignores certain aspects of carbon emission calculations. The AIB has raised the issue that this should be harmonised with a common approach to linking GoOs with carbon emissions (AIB, 2015).

GoOs could include the basic information that is needed to calculate the emitted carbon and generated radioactive waste arising from the underlying electricity production and when societal need is identified also information on (other) pollutants.

Currently, an array of different rules enabling compliance with the IPCC accounting rules for greenhouse gas emissions monitoring (GHG Protocol) exists in Europe.

Implement harmonisation requirements.

2009 RES Directive does not include requirements for cross-border coordination and transfer of GoOs between countries. This creates a barrier for cross-border exchange.

The AIB has developed the EECS system which facilitates cross-border transfers applicable to AIB members. AIB allows non-EECS members to access the EECS Hub under the condition that certain harmonisation measures are implemented and a contract is concluded with the AIB, allowing for cross-border GoO exchange for non-AIB member countries. Another solution could be to establish a single European registry for the electricity market. Then there would be no technical restrictions regarding transfer.

19

Table 3: Issues and concerns concerning GoOs relating to the lack of coordination between relevant EU legislation. Sources: AIB (2015), RE-DISS II (2015 a, 2015b), Raimundo (2015), RE-DISS (2012), Timpe and Sprongl (2009).

Issues and concerns Possible solutions considered Whilst EECS is providing for harmonised rules for GoOs in many European countries, the rules for electricity disclosure still differ from country to country; creating market barriers, arbitrage, loss of disclosure information and (most importantly) double-counting of renewable energy.

One first step in solving this point would be to start registering all energy generated, also the energy from fossil resources, and thus making it a universal tool for fuel source disclosure.

Lack of a Residual Mix calculation remains the major weakness in the majority of schemes implemented. In GoO systems with significant trade, import/export and conversion of energy carriers, correction of the residual mix upon cancellation of GoOs becomes very complex.

This problem could be addressed by very clear and proper bookkeeping of the GoOs in the processes of trade, import/export and conversion. Ultimately, residual mix calculations would become unnecessary with comprehensive coverage by GoOs of the whole supply by the energy carrier(s) in the jurisdiction in which GoOs are traded.

Additionality: to what extent does the purchase of a GoO lead to additional renewable production, compared to the situation without the purchase?

Perspectives on this issue vary between countries and stakeholders. In some GoO systems it is essentially neglected, in others it is actively prevented, e.g. by excluding renewable electricity under a feed-in payment scheme from eligibility for a GoO. The AIB best practice recommendation is to provide information to the end consumer on the degree the GoO can be considered additional, but this recommendation has not yet been implemented in most schemes.

Leakage of attributes and/or arbitrage, an error that occurs when different national GoO tracking systems are not coordinated.

Better harmonisation, mandatory implementation of the EECS system.

In the case of inter-modality and “netting” it is essential to do a full supply chain analysis: e.g. can coal-based electricity used for hydro pumping be labelled “green” when the stored hydropower is later discharged?

‘Proper bookkeeping’ should be sufficient to do the job: keeping explicit what electricity was used for pumping, and making sure that later discharged power gets the original tag back.

Policy redundancy: particularly when certificates are traded internationally, the corresponding production could receive both production support (e.g. a feed-in tariff) and end-use support (e.g. a consumer tax exemption). This could be considered undesired by some governments.

Inclusion of policy support in the GoO information setup is already obligatory under the 2009 RES directive. In international trade, such information should be maintained on the GoO, in a recognisable way for buyers. Then it is up to the buyer whether he considers any double incentives a problem or not.

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Key summary points

EU RES Directives have played a key role in facilitating the development of RES-E GoO schemes.

The provisions of the Directives provide for a basic ‘cradle-to-grave’ GoO tracking system. The

electronic tracking system features could also be used for GoO systems for other energy

carriers, such as green hydrogen.

A key weakness of the RES-E GoO prescriptions by the 2009 RES Directive is that RES-E GoOs

are to be applied for disclosure purposes only, while in several countries, links exist between

GoO systems and national support schemes, some of them with their own tradable certificate

systems. This creates diversity in the degree of additionality and general reliability of RES-E

GoO systems from the perspective of environmentally concerned consumers. A second

weakness hampering reliability in the case of cross-border trade is the absence of

comprehensive coverage of all forms of electricity generation. In general, the 2001 RES-E

Directive has lacked sufficient prescription, giving leeway to differing implementation in

Member States. This has particularly been problematic for cross-border exchange.

Furthermore, lack of coordination between relevant EU RES Directives and EU IEM Directives

creates problems with respect to credibility.

Another point of concern is the residual mix. Not all countries do residual mix calculations, and

such calculations become more and more complex when international trade and electricity

conversion into another energy carrier grow further.

Accountability of a specifically low emission factor particularly for RES-E has become a major

driver for voluntary markets for RES-E for non-household consumers. However, there is no

requirement to include relevant information on this aspect within the current GoO

requirements of the 2009 RES Directive.

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3 Other GoO systems

3.1 Renewable heat GoO systems for renewable heating (and cooling)

3.1.1 Introduction

The 2009 RES Directive (Article 15) transfers the concept of the GoO to the RES – Heating

and Cooling (H/C) sector by stipulating that “Member States may arrange for guarantees of

origin to be issued in response to a request from producers of heating and cooling from

renewable energy sources”. Although not obliged to, Member States can introduce a GoO

scheme for RES-H/C.

3.1.2 Key design features

In principle, the same rules apply to GoO

for RES-H/C as to those for RES-E.

However, as mentioned above, Member

States can decide freely whether they

want to provide for the issuance of GoOs

for RES-H/C, and if they do so, the issuing

can be restricted to installations above a

certain capacity threshold.

These regulations might have been added

to the 2009 RES Directive due to an

uncertainty of whether a true market will

emerge for RES-H/C GoOs, because

renewable heating and cooling, in

contrast to renewable electricity, cannot

be transferred in trans-European

networks but are rather limited to local

consumption or local distribution

networks for heat (and possibly cooling)

(Timpe and Sprongl, 2009).

The Netherlands is currently the only EU Member State with an operational scheme for the

issuance of RES H/C GoOs, see Box 2 (above) for a brief description. The scheme for RES H/C

GoOs mimics the RES-E GoO scheme (see 0 for description), i.e. the technical-administrative

set-up of the RES H/C scheme is more or less identical to that of the RES-E scheme. There

are, however, two important distinctions, firstly, there is no international market for cross-

Box 2: RES H/C GoO in the Netherlands

On 1 May 2013, the Dutch issuing body CertiQ

issued the first GoOs for heat produced in the

Netherlands by renewable sources. CertiQ

issues these certificates for every megawatt-

hour (MWh) of heat produced by renewable

energy sources, e.g. from biomass in thermal

boilers or from geothermal energy. The first

heat-producing installation for which GoOs

were issued was the wood-fired plant

operated by Bio Forte in Marum, in the

Groningen province, north in the Netherlands.

Source:

http://www.certiq.nl/en/news/2013/05/press-

release.html

22

border trade in RES H/C, and secondly, there are local networks for distributing heat as

opposed to a nation-wide grid infrastructure with cross-border connections to neighbouring

countries as in the electricity sector. Issues related to the latter are briefly discussed in

section 3.1.4 below.

3.1.3 Key actors and their roles

As for RES-H/C GoO scheme, key actors include the issuing body, producers, auditors,

traders, and end consumers.

The current issuing bodies for RES-E GoO are typically transmission system operators (TSOs)

or regulators from the electricity sector. Many are reluctant to expand their activity into the

areas of RES H/C, biofuels, bioliquids and biogas as these are usually beyond their sector

(Timpe and Sprongl, 2009). However, in the Netherlands, the TSO (Tennet) has created a

subsidiary company, CertiQ, which is responsible for both GoO schemes.

In addition, in the Netherlands, companies which are involved in conducting various tasks

within the RES-E GoO scheme are typically also engaged to conduct similar tasks within the

RES H/C GoO scheme, for example metering companies and accountants for measurements

and verification.

3.1.4 Key issues and lessons learned

As mentioned above, an important difference between the heat and electricity sector is the

geographical coverage of the grid infrastructure. Whilst electricity is transported in a

national grid network with cross-border connections, heat is transported in local grid

networks. In the Netherlands, the issue is being addressed concerning whether or not it is

acceptable to use a ‘book and claim’8 approach for RES H/C GoO when different parties are

not connected to the same heat grid.

8 A “book and claim” system can be understood as a system in which e.g. electricity producers can register or book (in a

database) how much they have produced, when they have produced it and how they have produced it, and electricity sellers and electricity consumers can use the same databases to “claim” that a specific type of electricity is theirs. For electricity GoOs, book and claim is the current practice in Europe, but for GoO systems for liquid and gaseous fuels, a ‘mass balance’ approach is needed (see section 3.2.4)

23

3.2 Renewable methane certification systems

3.2.1 History

Certificates for renewable methane (biomethane and methane from other renewable

sources) have a shorter history than those for electricity. However, in the past years,

initiatives in various EU countries have led to several GoO systems for renewable methane

(Gasunie 2013). It seems that the GoO systems of the Netherlands, Germany and the UK are

the most advanced.

Some countries such as the Netherlands have started with an elaborate GoO system

from the start, with a fully-fledged set of information on the GoO and an elaborate

supporting ICT system. Other countries such as Denmark have started with a very

simple certificate system that was further developed and extended over the course

of time.

Some key characteristics of the various current GoO systems for green gas can be

found in annex I.

3.2.2 Actors

As for GoO systems, key actors include the issuing body, producers, auditors, traders, and

end consumers.

The issuing body hands out the tradable certificates and owns the accompanying registry. In

some countries, the issuing body has been appointed by the government, in others it’s

merely a private sector initiative. Producers report their production to the issuing body,

including the required attributes and characteristics, in order to receive a certificate tailored

to the quality of renewable methane. This certificate, which proves the green nature of the

production, can be traded separately from the physical flow of the methane produced. The

information producers provide and their monitoring procedures are checked regularly by

auditors, who work according to the standards that the issuing body provides. The

certificates can be bought by traders or suppliers. Finally, they are bought by suppliers who

offer gas products to end consumers. Large end consumers can buy the certificates directly

in order to prove the greenness of their gas consumption. After the consumption of the gas

product, the certificate has to be cancelled in order to exclude any kind of double

marketing.

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3.2.3 Current purposes and definition

All certificate systems allow for consumer disclosure: an end consumer who wants to claim

that the gas he/she consumes is green can do so by buying and cancelling a proportional

number of certificates.

In some countries, such as Germany, Sweden and the Netherlands, certificates also play a

role in policy support for green methane. For example:

In the Netherlands, the data in the renewable methane certificates is used as proof

for calculation of the production in the feed-in premium scheme for renewable

methane, the SDE+ (although the certificate does not need to be handed in to

receive the support). Besides, renewable methane certificates that meet certain

conditions can be converted into ‘renewable fuel units’, the tradable certificates in

the context of the biofuels blending obligations.

In Germany, the bio-methane GoOs are accepted as a proof for receiving feed-in

support for the produced electricity from bio-methane (but not for the conditioned

and fed-in methane itself).

In Sweden, bio-methane certificates are used in the transport sector to apply for

exemption of various (fuel and vehicle) taxes.

3.2.4 Key issues and lessons learned

Start-up strategies

In general, GoO systems in different countries can vary: consistency between Member

States was not on the agenda at the start of many GoO systems. However, as trade of green

gas certificates is considered increasingly interesting, there is more interest in

harmonisation, including some pilots for trade.

Book-and-claim setups and international trade

The most common set-up for green gas GoO systems follows a book-and-claim approach:

the produced methane and its GoOs can be traded entirely separately. However, the EU

renewable energy directive and fuel quality directive only recognise international trade in

certified liquid and gaseous biofuels when this is done through a mass balance approach:

the certificate trade must be coupled to the physical transfer of the related energy carrier.

In practice, this also means that international trade of renewable methane GoOs should be

done through a mass balance approach, and there must be a physical connection between

the countries in which supplier and consumer are located, although the produced methane

can be blended with non-certified methane. Pilot activities have been started to couple

certificates with international transport nominations (proofs of physical gas trade between

25

countries) to allow imports/exports. An essential condition for such trade is that the green

methane is recognised in the GoO system of the receiving country (and corresponding

certificates are issued) and that in parallel, the same amount of certificates is cancelled in

the registry of the exporting country (Van Pijkeren and Pol 2015).

Credibility of the green certificate

For any new certificate, it is vital that the stated environmental claims are considered

trustworthy by the users of the certificate. For private consumers this may mean that the

environmental benefits of the certified green methane should be beyond dispute. When the

GoO system is used for governmental regulations, all relevant information that an authority

needs for checking compliance with the regulation requirements shall be in the GoO system.

Some examples from the Dutch setting (Van Pijkeren and Pol 2015):

Vertogas, the Dutch issuing body of renewable methane GoOs, has been relatively

strict in its definition of green gas. For example, it was based on net green methane

production even when for Dutch and EU regulations, gross production would also

have been acceptable.

Renewable methane certificates can only be converted into the renewable fuel

certificates for the renewable transport obligation if the green gas production has

not received feed-in support. The latter condition was introduced in order to prevent

double support for renewable methane, via a feed-in subsidy and through the price

of renewable fuel units, which is substantially higher than that of a renewable

methane certificate as it is essentially set by the additional costs of liquid biofuel

production (versus fossil liquid fuels), needed to meet the quota obligation.

Therefore, the related information for the government to check this was introduced

into the GoO system.

Some “missed opportunities“ of the new regulations on green gas GoOs are:

o No introduction of green gas labelling, which additional information on origin

and nature of the product would have been better for product transparency,

relevant for consumer’s choice and demand creation.

o No introduction of a of book and claim approach in cross-border trade, due to

conditions in Eu legislation (RED and FQD). This still needs to be done on the

basis of mass balancing. This is relevant as the separation of physical trade and

GoO trade will actually contribute to more market liquidity, while tying physical

and GoO trade stifles market liquidity.

o There is no EU-wide harmonised regulation on whether the issuance of a

certificate requires biogas to be conditioned in a way that it can be fed into the

“public” grid.

o In the Netherlands, CertiQ is the issuing body of electricity and heat GoOs, while

Vertogas is the issuing body for renewable methane. The fact that energy carriers

can be converted into each other (e.g. natural gas into electricity and hydrogen,

26

hydrogen into electricity and vice versa) argues in favour of the operation of

GoO systems by one neutral organisation: a situation with more than one

organisation renders a closed administrative system more difficult (hence more

opportunities for double claims) and thus increases total costs. The

administrative system needs to be fully consistent throughout the “energy

transformation life cycle”.

3.3 Renewable transport fuel certification

3.3.1 Context and objectives

The 2009 RES Directive also contains a specific target for renewable energy in transport of

10% in 2020, mostly to be met through liquid and gaseous biofuels. In most EU countries,

this target has been translated into a biofuels quota system (on an energy basis), in which

fuel suppliers must prove that a given share of their fuel sales consists of biofuels.

In most cases, this quota obligation is accompanied by a system that allows for trade

between market players, often through a dedicated certificate system. These certificates

must also contain the relevant information to serve several purposes:

Prove that the biofuels involved are compliant with the various conditions in the

2009 RES Directive on inter alia greenhouse gas emissions and feedstock origin;

Contain the relevant information to check whether the related biofuels are allowed

to count twice against the target (depending on the feedstock used);

Allow for certificate trade between different fuel suppliers under the quota

obligation.

In contrast to the GoO systems discussed earlier, these certificate systems for biofuels

usually do not have the purpose of consumer disclosure.

3.3.2 Other features

In terms of actors, biofuels quota systems are not different from the other GoO systems

discussed in this paper.

One specific feature of the biofuels quota schemes is that each EU country has to

implement the RED criteria by itself and is therefore allowed to apply its own approach to

comply with the RED criteria including an own system for safeguarding of biomass

sustainability. However, there is also a huge number of voluntary certification schemes

accredited by the European Commission ensuring compliance with the criteria set out in the

RED for the entire fuel life-cycle. Although the EU biofuel target is not internationally

27

tradable (all Member States need to meet the 10% target individually), the related

certificate systems for the biomass to be used for it do allow for international trade.

3.3.3 Issues and lessons learned

One issue that was encountered in the Netherlands regarding biofuels quota relates to

possible double incentives. As renewable methane use in transport also counts towards the

EU transport target, a green gas certificate can also be converted into a renewable fuel unit,

the certificate under the transport quota system. However, production of biomethane can

also receive a feed-in premium that essentially covers the full cost gap for its production. In

order to avoid the double incentive of production-subsidised renewable methane and quota

system, the government has taken the following measures :

The information on the green gas certificate includes whether or not it received the

feed-in premium.

The renewable fuel obligation certificate system blocks the conversion of a green

gas certificate into a renewable fuel unit if this certificate reports that a feed-in

premium was received.

Key summary points

In comparison to the RES-E GoO scheme, very few efforts have been made to put in place GoO

schemes for renewable heating and cooling. An important reason is the uncertainty of whether

a sufficiently liquid market will emerge for renewable heating and cooling.

In recent years, initiatives in various EU countries have led to several GoO systems for

renewable methane. These schemes vary considerably from very simplistic (Denmark) to a

scheme with fully-fledged information (e.g. Netherlands). Their features and lessons are

generally consistent with those for renewable electricity GoOs

There is an increasing interest in trade of green gas certificates, resulting in more attention for

harmonisation, including some pilots for actual trade.

28

4 Conclusions: Implications for a (green) hydrogen certificate system

On the basis of the review material in chapters 2 and 3, we draw conclusions on the

following elements:

1. Recommendations for an optimal green hydrogen GoO scheme, based on lessons

learned from existing schemes;

2. Key issues from experiences with other schemes, relevant to hydrogen;

3. Recommendations for a development pathway for the scheme.

4.1 Key lessons learnt and recommendations for an optimal scheme

The review provides some robust general insights for designing the green hydrogen GoO

scheme:

First, the overall set-up of GoO systems is successful, with the RES-E GoO system being

the most developed. The functional system, with clear roles for producers, traders,

consumers and an issuing body, in which certificates are issued, traded and finally

cancelled, has proven its value in other energy domains. This basic structure can be

transferred to a green hydrogen GoO system.

Any claims with respect to renewable origin of hydrogen consumed made by market

parties in commercial messages will have to be proven by cancelation of the required

hydrogen GoO.

For detailing of the system, the AIB Rules and Principles for a European Energy

Certificate Systems (EECS) are the best basis to start from. While they have not been

fully implemented in all Member States, it would be beneficial for a GoO scheme for

hydrogen to use these principles from the start.

An optimal scheme should not create any barriers for international trade and should

allow the European internal market to function well. This means that a single European

registry should be established from the start, or that national registries should

preferably use identical data structures, or procedures for international certificate

transfer should be developed that maintain all relevant information.

The GoO scheme should cover all possible production routes for green hydrogen,

including import and export within the EU and with third countries.

The GoO system should be open to all applications for hydrogen. While initially, industry

may be the main end user, it should already be prepared for the entrance of hydrogen

distributors for transport applications.

A key element of the GoO system should be the separation of information on the origin

of the product on the one hand, and the part that specifies whether the product meets

certain qualifications, such as the CertifHy definition of green hydrogen, or the 2009 RES

Directive qualifications for renewable transport fuels. The information part is factual and

29

neutral, while the qualifications part may change with developments in policy over time.

Obviously, the factual database needs to contain all relevant data needed to check the

products in the qualifications part, and in the course of time, additional types of

information may need to be added for this.

Initially, the function of the GoO system should be consumer disclosure. However, other

purposes can be foreseen, such as policy compliance, and the scheme should ideally

anticipate on that.

With potential changes in the external environment of the GoO scheme and its use, a

transparent and regular review and update of the system is also relevant. Such an

update could include the inclusion of new attributes in the ‘factual’ section of the GoO,

and updates of the qualifications section if definitions of ‘green’ or ‘sustainable’

hydrogen have been set up.

4.2 Key issues of existing schemes relevant to hydrogen

At several points, the review has revealed issues that have not (yet) been solved in the

currently existing GoO systems, or that are treated differently among them.

The issue of additionality, i.e. whether the purchase of a GoO leads to an increase in

renewable energy production capacity in comparison to the situation without such

purchase. Whilst existing EU legislation does not require GoOs to facilitate

additionality, better transparency, i.e. information included in a GoO on whether or

not additionality is achieved, would be beneficial from the perspective of consumers

wishing to influence the environmental profile of the energy supply as a whole.

The issue of the residual mix: although residual mix calculations as such do not need

to be complex, trade, import/export and conversion of one energy carrier into

another complicates their calculation and increases the risk of double counting. This

risk can be overcome by proper bookkeeping, and activities are ongoing to improve

practice in this field. In the long-term, comprehensive coverage of the full diversity of

all energy sources by the GoO systems would eliminate the residual mix issue.

Another point of attention is the issue of conversion of one energy carrier into

another (e.g. from renewable electricity into renewable hydrogen, or vice-versa). In

principle, proper book-keeping is sufficient to make sure such conversion is correctly

taken care of; earlier experiences show, however, that careful design of procedures

is essential.

Losses are not taken into account in current GoO schemes, such as the GoO for

renewable electricity. This is due to the fact that current EU legislation requires a

GoO to be issued upon request by a producer, e.g. to give proof of the origin of

electricity produced from renewable energy sources (which takes place before the

electricity is transported by the grid). However, there may be issues of energy losses

30

that need or should be taken into account with regard to energy transformations

involving (green) hydrogen. This point may therefore require attention.

To what extent should production of installations that use both renewable and non-

renewable energy be eligible for a renewable or green certificate? And what if the

overall CO2 intensity of such installations is relatively high? Examples of this are

biomass co-firing in coal-based power plants, and electrolysis hydrogen production

systems that partly use renewable and partly non-renewable power. This point

requires attention in the definition of green hydrogen. In support, a GoO system

could provide information not only about the directly related GHG emissions, but

also on the GHG emissions of the production system as a whole.

In general, the fact that the renewable attribute of an energy carrier is separated

from its physical trade makes a GoO inherently less ‘fool-proof’. Existing GoO

systems still encounter challenges with this type of ‘virtual trade in renewable

attributes’, e.g. in terms of general consumer confidence. In the design of any GoO

system, there needs to be alertness on this point.

4.3 Initial thoughts on a development pathway for a hydrogen GoO scheme

The lessons learnt and issues identified already set the scene for a development pathway for

green hydrogen GoOs. However, there seems to be some strategic dilemma in the

development of a green hydrogen GoO scheme. On the one hand, a scheme should be as

elaborate as possible from the early beginning in order to serve a variety of users and

accommodate e.g. trade and conversion in a reliable manner. Also, such a scheme would

preferably be Europe-wide from the start, with a top-down development, in order to have a

harmonised set of rules and also to provide one standard GoO. On the other hand, the

review also shows significant differences between Member States in how they deal with

some elements of their existing GoOs. It may thus be difficult to find EU-wide consensus

from the start. Besides, the initial market for green hydrogen will be small, and relative

administrative costs per unit of green hydrogen traded may be high when a fully-fledged

European GoO scheme is to be introduced from the outset.

In our view, it is essential to have a general European GoO scheme for green hydrogen. This

review already shows robust elements among GoO schemes that can be used for its

shaping, and points where there are differences between countries and between energy

carriers. In a development pathway for a hydrogen GoO, it is probably most effective to

start with a system that covers the robust parts. For its further development, the GoO

characteristics on which national positions differ should be further elaborated and

discussed, with the aim to reach a workable compromise that can then be used to further

develop the GoO scheme. Further details of a green hydrogen GoO scheme will be

developed in CertifHy Work Package 4. The development pathway will be further detailed in

the road mapping part , Work Package 5.

31

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Version 2.3, 31st July 2015. http://www.reliable-disclosure.org/upload/183-RE-

DISS_Best_Practice_Recommendations_v2.3_Final_31-07-15.pdf

RE-DIS II (2015b): Country profiles and summaries of national legislation. See

http://www.reliable-disclosure.org/documents/, site consulted on October 12, 2015.

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Ritter, H., T. Riess, C. Timpe, C. Pooley (2007): Assessment of the Cost of a European

Tracking Scheme. E TRACK Work Package 5 report. http://www.e-track-

project.org/E-TRACK_WP5_Report_v1.pdf

Timpe, C. and H. Sprongl (2009): Long term developments and integration of energy-related

certification schemes. WP6 report of the E-TRACK II project (Deliverable 9), 30

November 2009.

Van der Lee, J. and M. Lenzen (2015): Personal communication in an interview on RES-E

Guarantees of Origin and the role of CertiQ. CertiQ, Arnhem, March 20, 2015.

Van Pijkeren, G. and D. Pol (2015): Personal communication in an interview on green gas

certificates and the role of Vertogas. Vertogas, Groningen, March 16, 2015.

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Annex I: Directive 2001/77/EC on the concept of Guarantee of Origin

Preamble 10 states: “This Directive does not require Member States to recognize the

purchase of a guarantee of origin from other Member States or the corresponding purchase

of electricity as a contribution to the fulfilment of a national quota obligation. However, to

facilitate trade in electricity produced from renewable energy sources and to increase

transparency for the consumer’s choice between the electricity produced from non-

renewable and electricity produced from renewable energy sources, the guarantee of

origin of such electricity is necessary. Schemes for the guarantee of origin do not by

themselves imply a right to benefit from national support mechanisms established in

different Member States. It is important that all forms of electricity produces from

renewable energy sources are covered by such guarantees of origin. Preamble 11 adds: ”It is

important to distinguish guarantees of origin clearly from exchangeable green certificates.”

The main text sets out in Article 5 the legal meaning of a “Guarantee of origin of electricity

produced from renewable energy sources” according to Directive 2001/77/EC, viz.:

1. Member States shall…ensure that the origin of electricity produced from renewable energy sources can be guaranteed as such within the meaning of this directive according to objective, transparent and nondiscriminatory criteria laid down by each member State. They shall ensure that a guarantee of origin is issued to this effect in response to a request.

2. Member States may designate one or more competent bodies, independent of generation and distribution activities, to supervise the issue of such guarantees of origin.

3. A guarantee of origin shall:

specify the energy source from which the electricity was produced, specifying the dates and places of production, and in the case of hydroelectric installations, indicate the capacity;

serve to enable producers of electricity from renewable energy sources to demonstrate that the electricity they sell is produced from renewable energy sources within the meaning of this Directive.

4. Such guarantees of origin, issued according to paragraph 2, should be mutually recognized by the Member States, exclusively as proof of the elements referred to in paragraph 3. Any refusal to recognize a guarantee of origin as such proof, in particular for reasons relating to the prevention of fraud, must be based on objective, transparent and non-discriminatory criteria. In the event of refusal to recognize a guarantee of origin, the Commission may compel the refusing party to recognize it, particularly with regard to objective, transparent and non-discriminatory criteria on which such recognition is based.

5. Member States or the competent bodies shall put in place appropriate mechanisms to ensure that guarantees of origin are both accurate and reliable and they shall outline … the measures taken to ensure the reliability of the guarantee system.

6. After having consulted the Member States, the Commission shall….consider the form and methods that Member States could follow in order to guarantee the origin of electricity produced from renewable energy sources. If necessary, the Commission shall

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propose to the European Parliament and the Council the adoption of common rules in this respect.

Moreover, in the third footnote to indicative targets for year 2010 in the Annex of Directive

2001/77/EC an implicit remark is made on target accounting: “The percentage contributions

of RES-E in 1997 and 2010 are based on the national production of RES-E divided by the

gross national electricity consumption. In the case of internal trade of RES-E (with

recognized certification or origin registered) the calculation of these percentages will

influence 2010 figures by Member State but not the Community in total.

Directive 2009/28/EC on the concept of Guarantees of Origin

Whilst its precursor leaves some room for other purposes such as target accounting, the

RED stipulates consumer disclosure as the only function of a “renewables guarantee of

origin” (RE-GoO). Some relevant parts of the RED for the purposes of the CertifHy project

are highlighted below.

Preamble 52 states that Guarantees of Origin (GoO) issued for the purpose of this Directive

have the sole function of proving to the final customer that a given share or quantity of

energy was produced from renewable sources. A GoO can be transferred, independently of

the energy to which it relates, from one holder to another….Double counting and double

disclosure of GoO should be avoided…Energy from renewable sources in relation to which

the accompanying GoO has been sold separately by the producer should not be disclosed or

sold to the final customer as energy from renewable sources. It is important to distinguish

between green certificates used for support schemes and guarantees of origin. Preamble 53

adds that MS should …be able to require electricity suppliers who disclose their energy mix

to final customers in accordance with Article 3(6) of Directive 2003/54/EC to include a

minimum percentage of GoO from recently constructed installations ….. In repetition of

preamble 11 of its predecessor, preamble 56 of the RED states that GoO do not by

themselves confer a right to benefit from national support schemes.

Article 15 of the main text of the RED expands on the role of RE-GoO. It states the following:

For the purposes of proving to final customers the share or quantity of energy from

renewable sources in an energy supplier’s energy mix in accordance with …Directive

2003/54/EC, MS shall ensure that the origin of electricity produced from renewable energy

sources can be guaranteed as such within the meaning of this Directive, in accordance with

objective, transparent and non-discriminatory criteria. To that end, MS shall ensure that a

GoO is issued in response to a request from a producer of electricity from renewable energy

sources. MS may arrange for GoO to be issued in request from producers of heating and

cooling from renewable energy sources. Such an arrangement may be made subject to a

minimum capacity limit. A GoO shall be of the standard size of 1 MWh. No more than one

GoO shall be issued in respect of each unit of energy produced. MS shall ensure that the

same unit of energy from renewable sources is taken to account only once. MS may provide

that no support be granted to a producer when that producer receives a guarantee of origin

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for the same production of energy from renewable sources. The GoO shall have no function

in terms of (target accounting). Any use of a GoO shall take place within 12 months of

production of the corresponding energy unit. A GoO shall be cancelled once it has been

used. MS or designated competent bodies shall supervise the issuance, transfer and

cancellation of GoO. The designated competent bodies shall have non-overlapping

geographical responsibilities, and be independent of production, trade and supply activities.

MS or the designated competent bodies shall put in place appropriate mechanisms to

ensure that GoO shall be issued, transferred and cancelled electronically and are accurate,

reliable and fraud-resistant. A GoO shall specify at least:

a) the energy source from which the energy was produced and the start and the end dates of production;

b) whether it relates to electricity, or to heating or cooling; c) the identity, location, type and capacity of the installation where the energy was

produced; d) whether and to what extent the installation has benefitted from investment support,

whether and to what extent the unit of energy has benefited in any other way from a national support scheme, and the type of support scheme;

e) the date on which the installation became operational; and f) the date and country of issue and a unique identification number.

An electricity provider may prove the share or quantity of energy from renewable sources in

its energy mix for disclosure purposes (Directive 2003/54/EC) by using its GoO.

MS shall recognize GoO issued by other MS…exclusively (for disclosure purposes). It may

only refuse to do so when it has well-founded doubts about its accuracy, reliability or

veracity. The MS shall notify the Commission of such a refusal and its justification. If the

Commission finds that such refusal is unfounded, the Commission may adopt a decision

requiring the MS in question to recognise the GoO concerned.

A MS may introduce — in conformity with Community law — objective, transparent and

non-discriminatory criteria for the use of GoO in complying with disclosure obligations (Ref:

Directive 2003/54/EC, Art. 3(6)). Where energy suppliers market energy from renewable

sources to consumers with a reference to environmental or other benefits of the energy

from renewable sources, MS may require those energy suppliers to make available, in

summary form, information on the amount or share of energy from renewable sources that

comes from installations or increased capacity that became operational after 25 June 2009.

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Annex II: Factsheets of various GoO systems for renewable natural gas

This annex contains some structured information on several GoO systems for (green)

electricity, (green) heat, (green) methane and biofuels. Source: Gasunie (2013), and web

sites of the issuing bodies.

GoO Name Biogasregister Deutschland

Working area Germany

Energy carrier Biomethane

Issuing body Deutsche Energieagentur (DENA)

Tracking mechanism Mass Balancing

Attributes registered Extensive list of 50 attributes, including:

Applied feedstocks

Installation production capacity

Several process conditions

Tradeable internationally? Yes

Current applications Several governmental support schemes:

Renewable energy feed-in tariff (EEG)

Renewable heat support (EEWärmeG)

Biofuels support (BioKraftNachV)

GoO Name GvO hernieuwbaar gas

Working area The Netherlands

Energy carrier Renewable methane

Issuing body Vertogas

Tracking mechanism Book & Claim

Attributes registered Various attributes, including:

Applied feedstocks

Relevant (feedstock) sustainability information

Whether the installation receives feed-in premium (SDE)

Installation production capacity

Several process conditions

Tradeable internationally? For international trade, a declaration can be made to allow for trade on a Mass Balance basis

Applications Consumer disclosure

The renewable energy in transport obligation

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GoO Name Renewable Gas Guarantee of Origin (RGGoO)

Working area United Kingdom

Energy carrier Renewable methane

Issuing body Renewable Energy Association

Tracking mechanism Book & Claim

Attributes registered Various attributes, including:

The technology by which it was produced (biogas from AD, landfill gas, ‘syngas’ from gasification)

The predominant feedstock from which it was derived (sewage sludge, food, agricultural activities, industrial waste water treatment, municipal solid waste, other feedstocks and a combination of these feedstocks)

The month and year in which it was produced

The country in which it was produced (England, Wales, Scotland, N. Ireland)

The registered producer

The kWh number, or sequence or range of kWhs relating to that producer’s green gas.

Tradeable internationally? Not yet (2011), ambition to align the system in order to allow for trade

Applications Consumer disclosure

GoO Name Registre des Garanties d’Origine Biomethane (RGoO)

Working area France

Energy carrier Renewable methane

Issuing body Gaz Réseau Distribution France (GrDF)

Tracking mechanism Book & Claim

Attributes registered Production site

Key characteristics

Tradeable internationally? Not yet (2011)

Applications Consumer disclosure

Eligibility for a compensation fund

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GoO Name Naturemade Star

Working area Switzerland

Energy carrier Renewable methane, other renewable energy carriers

Issuing body Association for environmentally compatible energy

Tracking mechanism Book & Claim

Attributes registered Not found

Tradeable internationally? Not found

Applications Consumer disclosure

GoO Name Tradable certificates of origin system

Working area Poland

Energy carrier All energy carriers

Issuing body Not found

Tracking mechanism Book & Claim

Attributes registered Feedstock

Production technology

Tradeable internationally? No

Applications Fulfilment of the renewables quota system

GoO Name ‘Bionatural gas’ certificates

Working area Denmark

Energy carrier Biomethane

Issuing body Energimet.dk

Tracking mechanism Book & Claim

Attributes registered Not found

Tradeable internationally? No

Applications Consumer disclosure